SPDR S&P Dividend ETF (SDY)
SPDR S&P Dividend ETF (SDY): A solid foundation
Every month, I assemble a list of 16 stocks and ETFs to help investors choose conservative stocks and ETFs to buy. Investing in any or all of these choices will get you started in the right direction and will provide a solid foundation for your investment portfolio. I believe the SPDR S&P Dividend ETF (SDY) is the best place to start.
If you have limited funds, start with SDY because it is an exchange traded fund, similar to a mutual fund, with a diversified portfolio containing all companies in the S&P 1500 Index which have raised their dividends every year for the past 20 years. The objective of the SPDR S&P Dividend ETF is to include companies which have increased their dividends consistently. The current dividend yield is a very attractive 2.63% yield. Only 98 qualify out of 1,500 companies!
If you would like more information about the SPDR S&P Dividend ETF and the other 15 stocks included in my list of current buy recommendations, click here and become a subscriber to the Cabot Benjamin Graham Value Investor. I strongly believe it's the best investment you'll ever make.
From Cabot Wealth Advisory 9/30/13 Sign up for free Cabot Wealth Advisory
My favorite income producing investment is an ETF with a dividend yield of 2.6%. It’s the SPDR S&P Dividend ETF (SDY) Current Price 66.91; Minimum Sell Price 103.00, which holds all the companies in the S&P 1500 Index that have raised their dividends every year for the past 20 years. The objective of SDY is to include companies that have increased their dividends consistently. Only 85 companies qualify!
Companies with pristine dividend records tend to produce solid earnings and sustainable business models. Also, management is less likely to engage in reckless capital spending if one of the goals of management is to protect and grow the company’s dividend.
SDY is currently selling right at its net asset value. The P/E ratio, based on current EPS, of the stocks contained in the ETF is 19.1, and the price-to-book ratio is 2.74. Both ratios are reasonable, and the beta is below average at 0.77. Management fees total 0.35%.
SDY is quite well diversified with risk spread over 85 holdings. The largest position consumes only 2.70% of the total portfolio. The six largest holdings in order of size are AT&T, HCP, AbbVie, Consolidated Edison, Nucor and National Retail Properties.
The five largest sectors are Consumer Staples, Financial Services, Industrials, Materials and Utilities. SDY is a great substitution for bonds because of its 2.6% yield and steady performance. I expect SDY shares to reach my Min Sell Price of 103.00 within two years.
I will continue to follow SDY, as well as many other undervalued, high-quality companies and ETFs in my Cabot Benjamin Graham Value Investor. Earlier this month, I simplified my Investor format to make it easier for you to invest and instantly reap bigger profits and dividends. Learn more here.
|Fund Family:||SPDR State Street Global Advisors|
|Fund Inception Date:||Nov 8, 2005|
|Legal Type:||Exchange Traded Fund|
1/20/15 SPDR S&P Dividend ETF (SDY):